quarter. commodities overall and the dollar pulling back. liz: tiffany losing its luster, had to catch its outlook, numbers are not as strong and are not spending as much. nicole: they didn't do well and silver is more moderate. dave: my wife is not watching, i saw tiffany little bit this week but the bell as you can hear, ringing on wall street. all the indices were in positive territory. was an up and down they and earlier was down because of negative stock but that moderated a bit and lead to all the indices in positive territory and look at small and midsize stocks, a gain of over 1%. hefty gain. liz: we should look at natural-gas, everybody loves it. this is the year some 4% after an unexpected rise in supplies plus we still haven't seen

meaningfully freezing weather around the nation. once that happens watch them move to the upside. dave: i love natural gas because we have so much of it, the move lower sending natural gas lowe going down. liz: we have been hearing a lot from companies announcing special dividends pushing it up before the end of the year when tax breaks may change. stifle nicklaus saying the new skin and monster beverage are the most likely companies in the coverage to announce special dividend is due to the tax uncertainty that would bring up to 180 companies that announced this again. they may change their dividends before the end of the year. dave: think of the billions of dollars that will be in the economy just when people will be buying those blue boxes. this could be a nice stimulus for the economy. john boehner saying he has seen no substantive progress on the fiscal cliff talks in the last couple weeks. what compromises need to be

made? sheila bair, being a former fdic chair, telling us 4 ways wall street can help out and it is not all good news for investors. liz: did you see the cover of the wall street journal? fed stimulus like gillian 2013. we talked about this the second broke yesterday halfway through the 3:00 p.m. show. the man who wrote the article, wall street journal's chief economic correspondent and chief head head to lend us live. dave: before that is of we will tell you what drove the market with the data download. stocks extending yesterday's gains finishing a volatile session higher with the dow, s&p and nasdaq trading above the 200 day moving average for the first time in three weeks. telecom and health care were the top performing sectors. fewer americans filing first-time applications for unemployment benefits as hurricane sandy had the labor market and continues to subside a bit. weekly jobless claims fell by 20,000, seasonally adjusted

393,000. prior week's total was revised to 416,000. the hurricane play a role from 410,000. u.s. gdp grew at a revised 2.7% in the third quarter above the initial estimate of 2% reported last month. the commerce department attributes last quarter's increase to gains in private inventory investment and federal government spending so got to take that in mind and a decline in imports didn't help that number. liz: a crazy day in the pits of the cme. we have tim mulholland standing by, tom is a 1-act telling why it is time to shift away from -- release save names and diving in, and the dour is headed higher. he calls a day of 14,000, we will tell when he expects it to hit but let's start with him at the cme. you have john boehner, speaker of the house coming out at 11:00 eastern saying no substantive changes or developments after meeting with the treasury secretary and many had harry

reid saying it is going to be done by the end of the year-end market, with a place and some gains pretty decent. >> it is to be expected, they still have time and there's always the eleventh hour but at the end of the day rather than trading on those headlines at the end of the day it is pretty clear the election results which serve as a referendum from the august 11th fiasco that we had, the public wants the reasonable solution which means president obama has to move to the middle and let republicans save a little face and at the end of the day come up with some agreement at a resembles simpson-bowles. stuart: to the president just won and election by staying on the left. >> the argument is he is concerned with his legacy. if you wants to push that line, this term is not going to be one you want to remember in a positive way.

he is not running for reelection. what is good for the country, to the middle, and -- liz: if the market is moving on congressional ineptitude as my guest in the last hour called it, why not be an investor who looks at real fundamentals at this point, buying good quality stocks that dropped because of the gyration. >> that is what you are seeing. earlier this week we found important s&p 500 at the 200 day moving average at 1382 or 83 area, you see that debt buying, looks like what we are going to see is economic growth continued stimulus and interest-rate repression which means one of the only game in town for investors is the equity market and that is driving things now. liz: we saw the ten year yields. good to see portfolio manager.

good to have you. there's always talk about the election and the winner of obama but the most important market factor in november wasn't necessarily the win of obama over romney but it assures that ben bernanke will be here for a while. all this talk about the fiscal cliff is peanuts compared to the importance of what is happening in monetary policy. >> that is correct and the fiscal stimulus not so important. ben bernankeemaintaining quantitative easing for prolonged period of time gives investors confidence as opposed to taking the punch bowl away with quantitative easing of the mitt romney as president so when the fed says they will keep interest rates relatively low we are absolutely low and some time in 2013 you have to believe that. liz: the journal says qe 4 is coming. he is coming up in a minute because he got a big scoop yesterday on q e 4. great to have you on the program. the dow 14,000, you are

obviously the bull, what would get us there and in what period of time? >> nice to be on with you. i think when we look at the technicals here we are seeing a strong landscape of many individual stocks representing broad diverse leadership. this would not say if the expectations were for a fault of of the fiscal cliff. the market has been resilient in the face of a lot of headline news in recent years and i think as tom mentioned it is important we have transparency with the fed and the insurance interest rates are going to remain low. that is an underpinning and why these corrections are held short by the dow, held nicely at a 12,500 area recently. earnings are also very important ann earnings are continuing to come better than expected. it is not a reach to expect the dow to move up to the 14,000 level over the next month or

two, possibly by this year but more likely in the first quarter of 2013. the structure of stocks is very good. the policeing of access is very good. the balance of leadership is extraordinary unlike anything i have seen in the market in the last 30 years. dave: it is extraordinary on all sectors. i disagree with both of you about the fiscal cliff because there are real concerns whether the president wants to resolve it or if it will be resolved but the point you make is a good one, we are poised for greatness in equities aad i think of this dividend situation, all these companies, costco, disney, 1 pointed billion dollars, billions of dollars as we mentioned sitting on the sidelines for years literally will be walking into the economy just in time for christmas and holidays. >> just in time for that but also another reason we should expect a fairly strong first quarter because what happened with sandy will put downward pressure on the fourth quarter

but we will have the stimulus from the dividends that will help to push the economy higher and we will have a rebuild program. we have to be fairly optimistic about what the landscape looks like as we turn to the new year. liz: the sectors you like our financial, industrial and materials. >> we like growth cyclicals. one thing that is happening with this shift in the taxation dividends should for the will force investors out of the safety of utilities and telecoms and blue chip names. it will force people into those companies that either have very low dividends or no dividends. dave: we mentioned you see diversity like you have never seen before. the market up some good bets and your picks reflect that. going for the silver is a save play but also health care and roper international industrial product stocks. you span waterfront. >> we do. these represent different years. a company like roker is

interesting because it is involved in fluid control but not just one particular sector or one little niche. they are in water treatment, agriculture, medical, energy. the stock has been trending toward a new 52 week high. it looks very good for the long term and the short-term as well. baxter i would also say is very attractive here as is cf industries in the agriculture area. dave: we didn't get a chance to talk about japan but you are bullish on the fact that if he is elected prisoner and follows through with a lot of promises which could be bad for the japanese economy all that capital is coming here. we could have a lot of capital to play with. >> we could see a very significant turnaround in the yen. something we saw in the 1995-98 period when the yen declined 35% to 45% and during that period the s&p was up 140%. i am not saying there is a link

but just because of the yen is weakening doesn't mean things will be negative. liz: have a great holiday if we don't see you, thank you so much. you can call him traveling kim. treasury secretary tim geithner meeting with party leaders in congress to discuss the nation's fiscal crisis. was any progress made? behind-the-scenes of what is happening that we're not hearing about. we are live on capitol hill. dave: meeting with the president is great but what about reaction from wall street ceos rabin todd? sheila bair says it is time for wall street to ante up when it comes to helping fix the fiscal health ledge she have ideas how to do it but would it hurt investment? that is what we will ask coming up. liz: is quantitative easing part 4 on the way? very likely to be announced dec. 12. it come. he joins us to make the case. stay tuned. [ male announcer ] this is steve.

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dave: shares retailer coles sliding to the. let's go to nicole petallides at the stock exchange. why did it buck the trend? nicole: they came out with same-store sales and they were a big disappointment. analysts expect over 1% and they showed their numbers of same-store sales in the month of november came in and dropped 5.6%. talk about a tough economy, they also noted hurricane sandy, they felt good about the thanksgiving weekend. that was a little encouraging but overall they are noting hurricane sandy as one of the reason they did not meet analysts' expectations and you saw the stock reflected down 12%. liz: retailers did so beautifully. treasury secretary tim geithner

was on a mission today. the cameras watching him arrive at one location and leaving another meeting with all four party leaders in congress hoping to make some type of head way on the fiscal cliff negotiations. dave: peter barnes has been on tim geithner's trail all day long and joins us from capitol hill. we had little snippets of moon news that move to the markets. peter: treasury secretary left capitol hill here with republicans angry. we got a statement out of senator mitch mcconnell, senate republican leader after his meeting with tim geithner and he said, quote, they took a step backwards. according to a senate leadership republican leadership source secretary tim geithner came to the meeting basically read proposing the president's demand for $1.6 trillion in new tax revenue from wealthier americans. john boehner also met with secretary and 8 this morning and he was not happy either.

take a listen. >> despite claims that the president supports a balanced approach, democrats have yet to get serious about real spending cuts. no substantive progress has been made in the talks between the white house and the house over the last two months. >> is a tactic. it is a tactic. but the facts are these. the american people expect and deserve us to honor our responsibility for them, to manage this issue in a way that does not harm our economic growth. peter: house minority leader nancy pelosi finished her meeting with secretary tim geithner and she is expecttd to appear at a press conference to debrief reporters momentarily. liz: we heard elvis had left the building. tim geithner migrating to the next meeting. any word on progress the two

sides are making? peter: you are hearing what i just reported from senate falcons--republicans but talked one democrat who said he felt a phone call last night between john boehner and president obama was progress. he was feeling more optimistic and he believes the speaker and the president are trading proposals right now. liz: ok, thank you very much. dave: the boosting gdp may be short-lived. we have someone who says call it for a slowdown in the u.s. and warning of a worldwide recession is sauce -- is the moderate thing to do. you don't want to miss harry dent coming. liz: drug refills may be costing you even more money this year filling brandname prescription. you know cheaper alternatives, they may be getting even more affordable. you got to hear this story. we take any kind of prescription

drugs. details straight ahead in today's speed read. b

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liz: look at five stores in one minute. union strikes in los angeles and long beach terminals shutting down most of the nation's largest port. workers claim carol operators are outsourcing their jobs overseas, shippers are denying that claim. price gap between brand-name and generic drugs is widening. a new report says the price of brand name drugs jumped 13% ove%

the last year and generics plunged approximately 22%. the cheaper generics, student loan delinquencies rising. survey by the federal reserve bank of new york shows 11% of student loans are 90 days or more past due in the third quarter up from 8.9% in the previous quarter. there are two winners of last night's record $570,900,000 power ball drawing. one was sold in the kansas city region of missouri and the other in arizona but the identity of the winners is unknown. syriac is blocking internet access nationwide after confirming the unprecedented blackout which comes as fighting in the country's capital continues. that is today's speed read. dave: just in time. the third quarter u.s. gdp is being revised upward from 2 to send to 2.7% but one economist says enjoy it while you can believe in this low rate is the best we will see for quite a while. liz: harry dent is the ceo of

age as a dent. how to i make money off of that prediction? that belief? >> the markets look like it is rallying over a likely resolution of the fiscal cliff. there probably will be in the next month or so. we have been surging from all the stimulus that have a leading indicator from consumer metrics that looks at real time spending on the internet so you are catching retail at the very beginning before any slowdown hits the rest of the business chain and it says to expect a slowdown in consumer spending in the fourth quarter and first quarter and the markets are not expecting this. most investors aren't expecting it. ride this rally, looking at stocks going up 10% but especially if this happens sooner rather than later i would be looking to get out of stocks. dave: another factor might decrease spending, all the dividend checks coming in because everyone is from boating

dividend expecting taxes to go up. that means billions of dollars will be in he economy at use at just the right time when people are shopping. will that have a positive effect on retail? maybe you should wait until after the holiday season. >> we think stocks will head up for a number of reasons and that is another good one. the first quarter is one we have more vulnerability somewhere early next year and another thing we see is baby boomers, the average person, 80% of people peak around age 46, the wealthier 10%, they're the ones still spending even though there are ten or 20% of the economy they are 15% of consumer spending in a bigger part of wealth. a five year lag, demographics will give the economy another hit. that is harder to pinpoint but i do think, we do think we have seen as good a growth as we will see for awhile and you will see slowing. liz: after holiday spending that

would be understandable. we had steve tanner, record black friday, we heard from a number of companies the online business did beautifully across the nation and consumers' confidence is that multi-year highs. is this the time you would say let me get in some great names? >> you can't look at consumers. they just reflect what is happening now. things are ok for most people but we are seeing signs we tracked stocks like tiffany and nordstrom and other high end stock not doing so well yen and if there indices like they are peaking. we are more focused on if the high end slows down on spending not because they think the economy is bad but their kids are getting out of college and they don't need to spend as much money. that is what we are looking at and we will keep monitoring this. for now i will follow this leading indicator and assume there's something wrong here and it will show up by the first quarter. there is no reason christmas is going to be bad and certainly

not for the low end retailers. dave: not often a rich investor worried about income disparity or income inequality but you do. >> the u.s. has this more than any developed country, australia or canada. our top 1% and top 10% garner higher income as percentage of the economy and much higher percentage of wealth and assets so people talk about raising taxes on the top 1% or 2 presented won't make much difference, the top 1% control 40% of the well, 20% of the spending, the top-10 present control almost 50% of the spending. is going to make a difference if they raise taxes. we do think these people peak in their early 50s, they are set to naturally -- everybody slows down. doesn't matter how rich you are. few people spend more money after their kids get out of college and you don't have to invest so much in kids anymore.

dave: harry dent, author of the great crash ahead. there is a copy of the book. he sees it coming. liz: the fiscal cliff talks continue on wall street, good to look at who really pays the bulk of income taxes. there's some analysis. this comes in on all sides but the new analysis by the non-partisan tax foundation says the average federal tax rate for all taxpayers rose in 2010 to 11.81% up from 11.06% the previous year. the tax rate paid by individuals with incomes in the top 1% average 23.9%. the average, all filers in the bottom 50% paid an average tax rate of 2.37%. as you see from the new information which will be counterbalanced by other organizations as it comes out on a daily basis the wealthy pay a higher average rate. dave: buy a lot.

the top-10% pay 70% of income taxes and wonder what a fair share is. former fdic chair sheila bair telling us what changes she would like to see to bring about stronger fiscal help. changes that might make some on wall street feel uncomfortable. liz: find out why the fed will continue its big spending in the new year. the wall street journal on the cover story of today's paper he broke about this. don't forget to log onto facebook.com/"after the bell," click the like button, let us know if you feel because the stock market is involved, should it continue this gigantic stimulus spending with q e in 2013? what's next?

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of what it means to be the best. and at this special time of year, theshine even brighter. come to the winter event and get the mercedes-benz you've always wished for, now for an exceptional price. [ santa ] ho, h, ho, ho! [ male announcer lease a 2013 glk350 for $399 a month at your local mercedes-benz dealer. david: it is time for a look at today's market drivers. it was a wild day on wall street as traders weighed comments from capitol hill on the debt talks against a slew of positive economic data. all three major indices ended the session in the green and all 10 s&p sectors finished higher for the second day in a row. this is something we haven't seen in more than five months. meanwhile the national association of realtors reporting that pending home sales rose by 5.2% in october.

a month earlier and 13.2% year-over-year. this marks the 18th straight year-over-year gain and that is good news. big action in the commodities pits. oil ending a three session losing streak rallying almost 2% and bold rallied from the biggest drop in three weeks jumping more than $10, liz. liz: after a $35 drop yesterday. treasury secretary tim geithner just ended his meeting with congressional leaders today. nancc pelosi was last one to about fiscal cliff. david: our next guest says leaders in washington are not the only ones that can help our fiscal health the wall street has to step up as well. joining us former fdic chair, author of, bull by the horns, i love the name of that book. sheila. >> nice to be here, thank you. david: you want to increase taxes on investment. a lot of these taxes have come down tremendously over the past 15 years. of course it started with the clinton administration

when he cut capital-gains taxs. >> he did. david: usually the more you tax something the less you get of it as a result. >> correct. david: don't we want more investment now? >> well, i think there is plenty of investment dollars out there. just they're not going into very productive investments. you know, look, the issue is not whether you want to penalize the investment income. the issue whether you want to penalize wages and we pay substantially higher rates on wage income which is where most americans get their money, than we do investment income. no economic research that shows that having a lower capital gains rates spurs investment that creates jobs and spurs economic growth. there is really no correlation. david: wait, let me stop you. a lot of people see a lot of correlation going back to the days when clinton lowersed the capital gains rate from 28% down to 20%. we saw doubling of revenues. you had that supply side-effect. i know that is dirty word in some quarters. when we lowered rates from

28 to 20% we doubled revenue. >> well there could have been a lot of different explanations for that. but if you look historically over time, when we got rid of it after '86 we had a fairly healthy period, which mr. clinton benefited when he came in. i do think if you look historically over time it is very hard to see any kind of causal relationship between economic growth and job production and lowering rates on investment income. as warren buffett says, if they're going to make a profit they're going to make a profit whether, even taxed at a higher rate. i personally like the simpson-bowles idea which is what reagan did in '86. take everybody's rate down, right? close the loophole for investment income. cut back on the mortgage interest deduction. cut other loopholes and get marginal rates to 28% for everybody. then you --. liz: if you could hold off the hound, the lobbyists. >> i understand that i think that is better. i think we do have, look, we have a lot of tax arbitrage by people trying to take advantage of this lower rate. a lot of income being recast,

wage income being recast as capital gains income. a lot of derivatives constructed so people can get the lower rate. it adds complexity to the tax code. get rid of it. tax everybody at same rate and tax at lower rate. liz: sheila, the thesis of your idea, why you're on today, talk about forget congress and the president for a moment, congress wall street has to step up. special treatment they get has to stop. what is your idea of wall street and how it should get involved? >> that would be one big one. that is 90 billion a year i believe. there is another question whether we should subsidized excessive leverage at some of these financial institutions. right now the tax code actually gives financial institutions a financial incentive to fund themselves by borrowing a lot of money as opposed to funding themselves with shareholder equity. so some have suggested capping that. if you're levered over

certain percentage or number of ratio, 12 to one i suggest, you don't get interest deduction. another way to do it which would be more expensive, equalize treatment of interest and dividends to deduct dividends. that might mate i can more palatable for some to stop treatment for income. but, i think those, that's north would have a stablizing impact on the financial sector and also potentially raise some revenue. raising guarantee fees on all the mortgages the government is guaranteeing right now. we're still $140 billion in the hole with fannie and freddie. looks like the taxpayers will have to put several billion more into fha. raise those fees we charge the financial sector for guaranteeing all the mortgages to make sure taxpayers get paid back. david: sheila, we'll talk about the federal reserve board with john hilsenrath. >> okay. david: he had a breaking story on that subject just today. you have warned about the fed's low rates. you have warned that it is

pushing a lot of fixed income folks in far more riskier bets than they should be in. you warned about that. is that still a concern of yours? >> it is. and i just don't know what the exit strategy is. so i do think when you flood the system with all this liquidity you create the risk of asset bubbles, whether it is bonds, whether agriculture, you know, agriculture land, you create a lot of money that is looking for return. and this is, this phenomenon that we saw leading up to the subprime crisis. they had very accommodative monetary policy nothing compared to what we have now. people kept looking for yield because safe investments had such low return. if i thought the money was going into lending that supported economic growth and job creation i would say it is worth the risk but the evidence just isn't there. the risks down the road are substantial. so i do wish the fed would stand down, and the other problem is, the longer this goes on you have very low yielding -- assets on bank

balance sheets funding with deposits when. interest rates start to go up, interest rates on deposits money to pay on deposits will increase but they still have low yielding assets. that is the problem we got into the at s&l crisis. i don't see what the exit strategy and and i don't sigh what economic benefit we get from it. liz: sheila bair, wall street has to step up and take punches into the gut. david: i will turn you into a supply-sider yet. >> we'll that conversation later. >> we will. while debate on tax inhe is creases and spending cuts continues is real job creation being ignored? we have the coldwell banker ceo talking about jobs and what is really hot in real estate. liz: you saw it on the cover of today's "wall street journal." fed stimulus likely in 2013. coming up the man who write the article, the journal's

chief economic correspondent jon hilsenrath tells us why he thinks this will be announced december 12th can i help you? i heard you guys can ship ground for less than the ups store. that's right. i've learned the only way to get a holiday deal is to camp out. you know we've been open all night. is this a trick to get my spot? [ male announcer ] break from the holiday stress. save on ground shipping at fedex office.

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retailer five below. earnings per share topping estimates by two pennies a share, and revenue better than expected at $86.8 million. that is the latest from the fox business network, giving you the power to prosper

david: we have breaking news coming out of groupon. there have been some questions whether their ceo would remain. well, they had a board meeting. it has concluded and we're getting word that andrew mason, the groupon ceo, will remain as head of that company. liz: stock's been down of course. a lot of concern but he survives! mason survives. the commercial real estate market is building momentum as vacancy rates decline across the country. things are actually looking a little better. what types of commercial real estate could bring the best returns? our next guest is very bullish on some areas of commercial real estate but how bullish she gets on the entire sector depends on job creation in the u.s.

coldwell banker commercial trademark properties ceo, billie redmond joins us from raleigh, north carolina? things are looking better, aren't they? >> they are. we're seeing improvement across almost every sector. liz: which sectors are really showing, if you were to pull commercial real estate apart, whether apartment, looking say, for example, industrials, whatever, which subsector of commercial real estate looks healthiest? >> well in the investment real estate market what we're seeing by far is best is multifamily. that is an easy thing to understand given slide in residential seas. previous homeowners and would-be homebuyers became renters instead for the last several years. we've seen occupancy rates go almost to 100%. in many healthy markets we're seeing them 95% and above. it is good for landlords. puts pressure on rents. moves rents up some of the but it spurs demand for

construction. real estate industry and construction lost the most jobs during the recession. we can be optimistic about housing starts, multifamily construction. probably the most challenged today is still office. obviously very much tied to employment. we've seen office industrial still be challenged around their vacancy and occupancy ratios. liz: you're part of the job creators alliance, you also being in commercial real estate have storefronts that probably lead to small businesses. what is the health of the small business person that you speak to on a daily basis? >> well, thank you for asking that question. i think it is the most important thing. if we really want to focus on the issues and solutions available to our country, it all begins and ends with employment. we can put people to work, it raises revenues of the government. it raises people's individual choices how they spend their money, how they live, where they live, what they do. remember, we have a gdp based on 70% of the consumer spending. liz: okay. >> disposable income becomes

critical obviously. when you look at job growth, since 1980 the kauffman foundation did a study from 1980 to 2005. all net new jobs came from businesses that were less than five years old. it speaks to america's on the on theal bent and talent. liz: of course. let me jump in because we're running out of time but a quick sort of what everybody might be thinking about fort lee, new jersey, or aspen in downtown in colorado there are empty storefronts. where are you seeing strongest activity? >> we're seeing those with right attributes and demographics. they have growth. they have employment stability. it is all about employment. if you want community to do well and markets to do well it all comes back to healthy employment. liz: coldwell banker commercial ceo, billly redmond. thanks for joining us. >> thank you. >> according to today's "wall street journal" the new year will bring more fed stimulus. coming up next the person

who wrote the cover arttcle getting so much attention today, "wall street journal" chief economics correspondent jon hilsenrath will be joining us right after this. ♪

david:fy if any journalists know the current working of the federal reserve than "the wall street journal"'s jon hilsenrath. on the cover of today's "wall street journal" he lays out why the fed is likely to continue bond buying and money printing going into 2013. early reporting of this story yesterday likely helped boost a late market rally. here with more on the fed and some of its internal discontent is jon hilsenrath. terrific piece by the way. >> thanks very much. david: very interesting piece. now the stock market of course reacted to it yesterday. stock market loves to hear that the fed is going to be more accommodating but rising stock values don't always lead to more employment which is the fed mandate. >> right. david: in fact sometimes a stock can do very well if they fire people because they think they're downsizing. so how does, how do rising stock markets fit into the mandate that the fed has for

lowering unemployment? >> well, see, there's a few things that the fed is trying to do here, one of which is boosting what they would say is asset values, not just the value of stocks but also the values, for instance, of homes. they hope that by reducing asset values it makes people more willing to spend. there are other things that they're trying to do with these programs. they're trying to lower interest rates. we see some benefits of that coming through right now. mortgage costs have come down. more people are refinancing now than were six, nine months ago. we've also seen companies refinancing a lot of their debt because their interest rates are coming down. we're seeing a lot of companies issuing long-term bonds and retiring shorter term debt and shoring up their own finances. these are all kinds of things that the fed is trying to do with these policies. david: of course the critics would say, as far as housing is concerned, hey, look, they have beenry bringing down rates to historically low levels the past three years. it has only recently housing took off because demand is

beginning to increase. >> yeah. we had a bubble in housing and it took a long time for that would work its way through the system. you know, it is really, what is going on in the economy right now is really at the end of the day being driven by the effects of that bubble and working it through, working its way through the economy. you know all the fed can do is smooth things out a little bit. you know, i think there are probably aware of that, that, you know they think maybe these programs are helping on the margin but there are still a lot of bigger economic forces. the fiscal cliff being one of them. david: right. >> they don't really think they can overcome on their own. david: jon, we had sheila bair on a critic the fed. she is not a right-wing ideologue by any respect. she was for elizabeth warren. she says they are creating another bubble. in december they meet again. the question will they continue with operation twist where they buy the

long term bonds. they don't have many short-term bonds to trade for in their portfolio, do they? >> bottom line, if they continue purchases of long term bonds they have been doing they will have to do it by printing money, which isn't going to make critics of the fed --. david: that is pure monetizaton of the debt, right? if they're printing money to buy debt. that is monetizaton of debt. that is the definition of it. >> it is close to it. it is close to it. they're not buying it directly from the government. they're buying it from secondary markets. it certainly has the sniff of that. this is one of the reasons why the what the fed is doing makes people really uncomfortable. david: it does. >> their response says, we don't have inflation. people have been saying for three years the fed would cause inflation. most measures are 2%. david: i have to jump in. we only have 10 seconds. one of the people dissatisfied is dallas fed

president richard fisher. >> absolutely. david: does his voice amount to anything. >> there is lot of dissent at fed. one of the issues bernanke has to overcome. he is not the only one but certainly are a lot of people displeased with what they're doing, even inside the central bank. david: we should remember he is no longer member voting for the fed but has tremendous influence. john hills is rath has tremendous influence on the economy. seen that today. liz: always pleasure to have jon on the show. rally continue from yesterday to today. tomorrow you have to be with us. we'll see you then. money with melissa francis is next.